By

Jennifer Haney

11 September 2019

DOJ Defends Medicare Advantage Upcoding Claims Against Sutter

On August 28, 2019, the United States filed a brief in opposition to Sutter’s June 14, 2019 motion to dismiss the Department of Justice’s Complaint-in-Intervention in a False Claims Act suit alleging Sutter knowingly submitted and caused the submission of unsupported diagnosis codes for Medicare Advantage Organization (MAO) patients in order to inflate Medicare reimbursements.  On the same day, the Relator, Kathy Ormsby, also filed a similar brief in opposition to Sutter’s motion to dismiss.  We previously discussed Sutter’s motion to dismiss here and the Department of Justice’s Complaint-in-Intervention here.

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22 August 2019

Medicare Advantage Providers Pay $5M to Settle FCA Allegations Relating to Unsupported Diagnosis Codes

On August 8, 2019, Beaver Medical Group L.P. (“Beaver”) and a Beaver-affiliated physician, Dr. Sherif Khalil, agreed to pay a combined total of $5 million to resolve allegations that the providers knowingly submitted diagnosis codes that were not supported by the medical records in order to inflate reimbursements from Medicare.  The qui tam action was brought by a former employee of Beaver, Dr. David Nutter, and DOJ intervened.  The settlement reflects DOJ’s continuing efforts to use its enforcement power to pursue fraud in the Medicare Advantage space despite recent setbacks in the UnitedHealthcare Insurance Co. v. Azar, 330 F. Supp. 3d 173 (D.D.C. 2018), which vacated a portion of CMS’s 2014 Final Overpayment Rule applicable to the Medicare Advantage program, previously discussed here.  Indeed, in its press release, DOJ emphasized that preventing Medicare Advantage fraud remains a top priority:  “As enrollment in Medicare Advantage continues to grow, investigation into accuracy of diagnosis data becomes ever more important….Those who inflate bills sent to government health programs can except to pay a heavy price.”  We will continue to monitor and provide updates on these issues as they develop.

DOJ’s press release can be found here.

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21 August 2019

District Court Dismisses FCA Suit in Medicare Advantage Upcoding Case

On August 6, 2019, the United States District Court for the Western District of Texas granted a motion to dismiss filed by Baylor Scott & White Health (“Baylor”), a network of inpatient short-term acute care hospitals, in a False Claims Act suit alleging that Baylor submitted “more than $61.8 million in false claims” by upcoding certain diagnosis codes.  The Court dismissed all claims with prejudice, finding that the Relator, Integra Med Analytics LLC, alleged only “naked assertions devoid of further factual enhancement” that were “insufficient under Rule 8’s pleading standards.”  The Department of Justice declined to intervene in the suit.

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28 June 2019

Sutter Health Files Motion to Dismiss Criticizing DOJ’s Outdated FCA Theories in Medicare Advantage Case

On June 14, 2019, Sutter Health (“Sutter”) filed a Motion to Dismiss the Department of Justice’s Complaint-in-Intervention in a False Claims Act suit alleging Sutter knowingly submitted and caused the submission of unsupported diagnoses codes for Medicare Advantage patients in order to inflate Medicare reimbursements.  The Department of Justice filed its Complaint-in-Intervention on March 4, 2019, which we previously discussed here.

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03 April 2019

District Court Relies on Azar’s Overruling of Overpayment Rule to Deliver Another Blow to DOJ’s MA Enforcement Efforts

On March 29, 2019, the United States District Court for the Central District of California denied the Department of Justice’s Motion for Partial Summary Judgment against UnitedHealth Group (“United”) in a False Claims Act suit alleging that United knowingly retained overpayments for unsupported diagnosis codes submitted for Medicare Advantage patients.  In reaching its decision, the Court relied on the decision by the United States District Court for the District of Columbia to vacate a portion of CMS’s 2014 Final Overpayment Rule applicable to the Medicare Advantage program in UnitedHealthcare Insurance Co. v. Azar, 330 F. Supp. 3d 173 (D.D.C. 2018), which we previously discussed here.

(more…)

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08 March 2019

DOJ Files Complaint-in-Intervention in Medicare Advantage Case Against Sutter Health

On March 4, 2019, the Department of Justice filed its Complaint-in-Intervention against Sutter Health (“Sutter”) and its affiliate Palo Alto Medical Foundation (“PAMF”) in a False Claims Act suit alleging that the Defendants knowingly submitted and caused the submission of unsupported diagnosis codes for Medicare Advantage patients in order to increase reimbursements from Medicare.  DOJ had previously announced its decision to intervene on December 11, 2018, as we previously discussed here.

(more…)

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14 December 2018

DOJ Intervenes in Medicare Advantage FCA Case Against Provider

On December 11, 2018, the Department of Justice announced that it has intervened in a False Claims Act suit against Sutter Health and its affiliate Palo Alto Medical Foundation.  The suit, originally filed in March 2015 by a former Risk Adjustment Manager at Palo Alto Medical, alleges that Sutter knowingly submitted unsupported diagnosis codes for Medicare Advantage patients in order to increase reimbursements from Medicare. (more…)

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20 November 2018

Court Compels Medicare Advantage Plan to Comply With CID for Testimony in Diagnosis Coding Investigation

On November 13, 2018, a magistrate judge issued a report to the United States District Court for the Southern District of New York recommending that the Department of Justice’s (“DOJ”) petition to compel deposition testimony from Anthem regarding its procedures and processes for verifying diagnoses for Medicare Advantage payments be granted and that a date be set for Anthem’s witness to testify.  DOJ is seeking the testimony in connection with its investigation of Anthem as part of its broader enforcement efforts under the FCA focused on the Medicare Advantage program.  (more…)

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07 September 2018

District Court Vacates 2014 Medicare Advantage Overpayment Rule and Curtails Potential Avenues for DOJ to Pursue False Claims Act Damages

On September 7, 2018, the United States District Court for the District of Columbia vacated CMS’s 2014 Final Overpayment Rule,[1] applicable to the Medicare Advantage program, granting summary judgment to UnitedHealthcare that the Final Rule violated the Medicare statute, was inconsistent with the Affordable Care Act (ACA) and the False Claims Act (FCA), and violated the Administrative Procedures Act (APA).  In broad strokes, the District Court confronted two statutory issues.  The first centered on the undisputed fact that the Final Rule did not account for known errors in the data (from traditional Medicare) used to calculate payments to Medicare Advantage plans.  The court found that this failure violates the statutory mandate of “actuarial equivalence” because, although “payments for care under traditional Medicare and Medicare Advantage are both set annually based on costs from unaudited traditional Medicare records,” the Final Rule “systematically devalues payments to Medicare Advantage insurers by measuring ‘overpayments’ based on audited patient records.”  As a result, the court concluded that the Final Rule “establishes a system where ‘actuarial equivalence’ cannot be achieved.”  On the same basis, the court found that the Final Rule violates the statutory requirement to use the “same methodology” in calculating expenditures in traditional Medicare and determining payments to Medicare Advantage plans.  The Final Rule “fails to recognize a crucial data mismatch and, without correction, it fails to satisfy [the Medicare statute].”  (more…)

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28 August 2017

Sixth Circuit Awards Defendant Nearly Half a Million Dollars in Attorneys’ Fees Despite Government’s FCA Victory

The Sixth Circuit recently awarded a defendant $468,704 in attorney’s fees, despite the government winning its FCA suit. The Court found that the defendant was entitled to recover its fees under the plain language of the Equal Access to Justice Act (“EAJA”), even though it was not the prevailing party, because the government’s demand for $1.6 million in damages was “unreasonable” and “substantially in excess” of the final judgment of $14,748.   (more…)

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